WeChat Plans to Stop Merchants From Transacting in Cryptocurrencies

WeChat, the #1 messaging app in China, is also widely used for cryptocurrency transactions. Recently, WeChat Payment has revised the “WeChat Agreement for Payment Service,” which involves the control and regulation of illegal transactions, including cryptocurrency transactions. The revised agreement will be put into effect on May 31, 2019.

According to the first, second and third terms of the agreement, direct or disguised engagement in internet gambling, pornographic platforms, internet lottery sales platforms, illegal foreign exchanges, precious metal investment trading platforms, illegal securities and futures trading platforms, token issuance financing and cryptocurrency trading platforms are not allowed on WeChat; asset management business on the internet without the approval of the regulatory authorities is not allowed, as well as illegal transactions such as commodity trading sites, without the approval of the provincial government; and Tenpay, the payment platform of WeChat, shall have the right to stop the payment and settlement services.

Early in August 2018, Tencent issued a statement about its measures to address concerns over ICOs and cryptocurrencies. Tencent said that it had taken the following measures in response to violations in terms of payment channels:

Restrict the collection limit of the illegal platform account and prohibit it from cryptocurrency transactions on WeChat.

Limit the number of individual sellers’ accounts, only allowing daily use of social activities. The collection of transactions related to cryptocurrency is limited as well. At present, all cryptocurrency transactions under merchant names have been resolved.

Conduct real-time monitoring of daily transactions and risk severity assessment of transactions based on monitoring results. This could lead to taking direct interception measures for illegal transactions.

At that time, Tencent established a targeted risk control model to identify personal cryptocurrency transfers and transactions, and it took corresponding measures for violations discovered by the platform at once.

Aside from WeChat, Alipay, another leading payment platform, is also closely monitoring all transactions involving individual cryptocurrency transactions and has established an oversight system for key websites and accounts.

Alipay said that it will take measures such as limiting account collection services or even permanently limiting withdrawals for personal accounts suspected of virtual currency transactions, if there is reasonable evidence of wrongdoing. Last year, Alipay investigated and shut down about 3,000 accounts that were involved in cryptocurrency transactions.